Through the Ethereum blockchain, SEBA Bank is all set to issue a digital token that will allow investors to assume ownership of all actual gold housed in Swiss vaults. The Swiss bank’s new offering is available as an ERC-20 token. I. e., it is kept and sold on the world’s second-largest blockchain. Something very different from standard digital gold goods, which are not kept on the blockchain and solely serve as an ‘IOU’ from the publisher.
Because blockchains like Ethereum do not necessitate a trustworthy third-party system to authenticate transactions, they give a better level of investment security. Instead, they employ a ledger that is highly decentralized and shared by everybody within the mesh and records all transactions in a single, indisputable manner. The capability is then enhanced by multi-party smart contracts offered by Ethereum, which may, for example, check the sequential numbers of actual gold bars that have been assigned to particular digital holdings.
The new gold token, according to SEBA Bank CEO Guido Buehler, is a “landmark development” for the industry dealing with precious metals, not only because it’s the first of its kind, but also because of SEBA Bank’s proven record of institutional-grade compliance.
“As issuance and custody of the token is managed by a Swiss bank with a banking and securities dealer license, the token platform can be trusted by institutional investors to offer a secure and regulated platform for investment,” he expressed. “In addition, the custody of the physical gold is with regulated Swiss firms, ensuring that asset security is held paramount for both the digital and physical nature of the product.”
Holders of the token can get real gold from refineries that have partnered with SEBA Bank at any time, without having to pay the storage and transportation costs that typical digital or electronic gold platforms like BullionVault charge. Every token is divided into four decimal places and represents 1g (USD 57) of metal.
In addition, this token can be utilized in digital asset exchanges as a completely compliant stablecoin, similar to the role of USDC and fiat stablecoin Tether.
Several cryptocurrency users opt to store the profits of digital assets like bitcoin within stablecoin balances tied to a government-issued currency rather than the fiat currency itself since such proxies based on blockchain are much easier to sell, lend out for interest. Users may substitute part of their risk to exchange rate unpredictability and inflation with exposure to metal prices by adding a gold stablecoin to their portfolios.